Uber Finds a Niche in Japan

June 3, 2016, 11:54 AM UTC
Uber logo on a vehicle near Union Square in San Francisco, California
The Uber logo is seen on a vehicle near Union Square in San Francisco, California, U.S. May 7, 2015. REUTERS/Robert Galbraith/File Photo - RTX2C0YV
Robert Galbraith — Reuters


Ride-hailing app Uber has finally cracked Japan. It has been approved to offer its service in Tango, part of Kyotango city on the west coast, with a population of just 5,560 and abandoned by the local taxi firm eight years ago.

Tango is one of Japan’s almost 800 designated depopulated communities, and about 40% of the population is aged over 65, well above the national average ratio of 27%.

For public transport, residents have to rely on an on-demand bus operated by a nonprofit group, but bookings have to be made by the evening before travel and the bus doesn’t go beyond the town.

Uber, valued at over $60 billion, hopes to tap that demographic demand to ferry around the elderly.

“Finally, we were able to make our very first step,” said Masami Takahashi, president of UberJapan. “This service can be a solution for Japan’s aging society.”

The U.S. firm, one of the pioneers in the “sharing economy,” has faced resistance and restrictions in some cities as established taxi operators complained of unfair competition.

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In Japan, Uber was blocked by authorities from setting up in two cities, as Japan bars non-professional drivers from offering taxi services. In Tokyo, Uber operates as a travel agent, connecting users to established taxi company drivers through its ride-hailing app.

Non-professional drivers can only operate where public transport is not readily available—like in Tango, where rice paddies surround a main street dotted with old, wooden houses.

Tablets, Trekking

Among the challenges Uber faces in Tango are persuading seniors to use mobile devices and credit cards.

Residents will use tablets, such as iPads, to book Uber rides. Uber is making available 50 tablets—easier for the elderly to read than smartphones—for free for six months to book one of 18 registered cars.

“What a great service,” said 84-year-old Miyoshi Azuma, brandishing one of the tablets. “With this, we can call the car by just clicking the button.” She did add that locals may need simpler instructions on how to use the tablet and Uber app.

“I think it will take time to judge whether this service will be a success because people here are sensitive to money,” said Takashi Ose, a 79-year-old head of a senior citizens club.

Uber charges half the rate of the taxi firm in central Kyotango city.

Takuo Nakanishi, 66, who drives for Kyotango’s sole taxi operator Mineyama Taxi, worries that Uber may hurt his business.

“I can’t afford to live on just my taxi salary. I can be a driver only because I receive a pension. That’s how small demand is here for taxis,” he said, adding it is not viable for his company to offer a full taxi service for Tango.

Uber hopes to roll out similar services in other depopulated areas in Japan. It’s global UberASSIST platform already caters for seniors and people with disabilities, and it provides transport services for elderly care homes in Florida, for example.

“There are many communities which cannot respond to people’s need to go somewhere when they need,” said Takahashi. “Uber can be a sustainable business model in such places because we can provide services using existing assets.”

One of those assets, 68-year-old Uber driver Yoshihiro Hatanaka, welcomed the flexibility of Uber‘s service.

“I love trekking, so I’ll probably only drive when it’s raining,” he said.

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